Edited version of private ruling

Authorisation Number: 1011726313350

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Ruling

Subject: Supplies by a Charitable Institution

Question

Are all the activities undertaken at a conference or a convention (event) integral to the practice of a religion for the purposes of providing a religious service under section 38-220 of the GST Act?

Answer

No, not all activities undertaken at an event are considered integral to the practice of a religion for the purposes of providing a religious service under section 38-220 of the GST Act.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The Church is registered for GST and registered as a Charitable Institution.

The Church holds conventions and conferences (events) to organise and oversee the management of the Church organisation.

The events include activities such as:

· Devotional,

· Prayer meeting,

· Ordination and commissioning of ministerial candidates,

· Conduct teaching, worship, training and other similar activities,

· Bring together various groups of people from across the District,

· To discuss the Constitution and to make recommendations for change to the National Conference,

· To appoint office holders for the coming year,

· To hear reports on the activities from the leaders of the District,

· The annual business meeting represented by both ministerial and lay delegates from local Churches,

· To review financial reports and approve budgets, and

· To hear Pastoral reports from local Churches,

Income from the events may be sourced from:

· Registration fees,

· Accommodation and food (prepared meals),

· Ministry Books,

· Ministry Study Material,

· Church Manuals, Handbook (including Constitution),

· Clothing with Logo, and

· Offering.

· Books purchased and resold are sold at market value,

· Ministry Study Material (where the Church has them printed) sold at market value unless discounts for bulk buys,

· Handbook (Constitution) sold as the cost of production, and

· Clothing with Logo sold at the cost of production.

Reasons for decision

A supply is taxable where it satisfies section 9-5 of the GST Act. This section states:

You make a taxable supply if:

(a) you make a supply for consideration, and

(b) the supply is made in course or furtherance of an enterprise that you carry on, and

(c) the supply is connected with Australia, and

(d) the supplier is registered or required to be registered for GST.

However, the supply is only taxable to the extent it is not GST-free or input taxed.

It is considered that where a registration fee is paid it provides access to attend an event. It is the registration fee that represents consideration for the supply being made by the Church of providing an event to an attendee. This means that the Church provides the supply of an event for consideration, being the registration fee. Further the supply of an event is made in the course of furtherance of the enterprise that the Church carries on, an event is connected with Australia, as it is done in Australia, and the Church is registered for GST. Hence, the supply of an event is taxable to the extent it is not GST-free or input taxed.

There is no provision that would result in the supply being input taxed. But there are GST-free provisions that may apply to religious organisations and charitable institutions.

In particular sections 38-220 and 38-250 of the GST Act.

Section 38-220 of the GST Act provides that a supply of a religious service is GST-free if that supply is:

· supplied by a religious institution; and

· is integral to the practice of that religion.

The Church is a religious institution to which the provision applies. It therefore, remains to determine if the supply of an event is integral to the practice of that religion.

Where not all the activities to be undertaken at an event are integral to the practice of the religion it needs to be considered what the dominant purpose of the event is.

Where the dominant purpose of an event is to undertake activities that are of the nature of a religious service such as, prayer meetings, devotions, religious speeches, an event will be GST-free under section 38-220 of the GST Act.

However, where the dominant purpose of an event is to undertake Church business, such as an annual business meeting, reviewing audited financial reports and approving budgets for the operation of the Church for the coming year, these are not considered to be integral to the practice of the religion in providing a religious service. Hence, if this is the case an event would not be GST-free under section 38-220 of the GST Act.

The Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Act 1999 provides an example of what is integral to the practice of religion and states:

· The supply of a rabbi's services at a bar mitzvah would be GST-free because it is integral to the practice of Judaism.

· Car hire and purchase of flowers for use in a church wedding is not an integral part of the wedding service and is not GST-free.

Therefore, where an event has the dominant purpose of providing religious devotion and instruction in the faith it will be a GST-free supply of a religious service and GST-free but not where the dominant purpose is to hold an event that primarily deals with Church business, such as annual business meeting, reviewing audited financial reports and approving budgets for the operation of the Church for the coming year.

The Church at an event may also provide accommodation and food (prepared meals), ministry books, ministry study material, Church manuals, handbook (including Constitution), and Clothing with Logo. From the information provided it is clear that at an event the Church may also provide other supplies of goods and services that are treated separately from the registration fee. These other goods and services are not viewed as being integral to the supply of an event that is a religious service.

However, these other supplies may be GST-free under section 38-250 of the GST Act. The section provides that:

(1) A supply is GST-free if:

(a) the supplier is a charitable institution, a trustee of a charitable fund, …and

(b) the supply is for *consideration that:

i) If the supply is a supply of accommodation - is less than 75% of the *GST inclusive market value of the supply, or

ii) If the supply is not a supply of accommodation - is less than 50% of the GST inclusive market value of the supply.

(2) A supply is GST-free if:

(a) the supplier is a charitable institution, a trustee of a charitable fund, …and

(b) the supply is for *consideration that:

i) if the supply is a supply of accommodation - is less than 75% of the cost to the supplier of providing the accommodation, or

ii) if the supply is not a supply of accommodation - is less than 75% of the consideration the supplier provided, or was liable to provide, for acquiring the thing supplied.

* denotes a term defined in the Dictionary, starting at section 195-1 of the GST Act.

The Church is a charitable institution, therefore, section 38-250 of the GST Act, may apply.

When considering the accommodation and food (prepared meals) it needs to be clear whether it is being supplied by the Church to the attendees or actually being supplied from another organisation to an attendee. That is to say does the Church contract for the supply of accommodation and food (prepared meals) and then on supply to an attendee, and, hence makes a supply of accommodation and food (prepared meals), or does the Church facilitate the supply from another organisation to an attendee. The later would result in the Church not making a supply of accommodation and food (prepared meals) as the attendee would contract directly with the other organisation albeit with the assistance of the Church.

Where the attendee contracts for the supply of accommodation and food (prepared meals) at an event with another organisation this will not involve the Church beyond assisting with numbers etc and possibly handling money. However, where the Church contracts with another organisation, and then makes a supply of accommodation and food (prepared meals) to an attendee, the Church will make a supply of accommodation and food (prepared meals) for consideration, being the payment from the attendee. Where the other requirements of section 9-5 of the GST Act are met the supply will be taxable. That is where the Church makes the supply in the course and furtherance of their enterprise they carry on, the supply is connected to Australia, as it is done in Australia and the Church is registered, it will be a taxable supply to the extent it is not GST-free.

Where the Church supplies the accommodation to an attendee, for section 38-250 of the GST Act to apply, it must do so at less than 75% of the GST inclusive market value of the accommodation or at less than 75% of the cost to the supplier of providing the accommodation, for it to be GST-free. Where this is not the case it will remain taxable.

Where the Church supplies food (prepared meals) to an attendee, for section 38-250 of the GST Act to apply, it must do so at less than 50% of the GST inclusive market value of the food or for less than 75% of the consideration the Church provided, or was liable to provide, for acquiring the food supplied, for it to be GST-free. Where this is not the case it will remain taxable.

Regarding other items sold at an event, such as books, study material and clothing, for section 38-250 of the GST Act to apply, they must be supplied at less than 50% of the GST inclusive market value or for less than 75% of the consideration the Church provided, or was liable to provide, for acquiring the goods supplied, to be GST-free. Where this is not the case they will remain taxable.

Donations and offerings are not subject to GST as a donation or offering is not payment in return for the supply of a good or service.